FSA gets it wrong on FSCS... again
Sentiment is seemingly shifting towards Martin Wheatley’s new FCA approach, but FSCS own goals are paring gains.
While the birfurcation of the Financial Services Authority did not initially fill me with confidence, I have to admit I’m warming to some of the rhetoric currently being espoused by our incoming conduct regulation chief.
To be clear, I still harbour reservations about the concept of two regulators overseeing financial services with remits that contain inherent overlap. If the problem with the current system was an inability for a single regulator to keep abreast of the minutiae of activities within our variegated sector, it is surely just as pernicious to have two bodies jostling for position and potentially allowing issues to slip through the gaps that will inevitably open up.
At best, there will likely be significant cost implications for those that are dual regulated that will irrevocably be passed on to consumers.
That said, it is incontestable that the FSA has been caught ball-watching all too often. It has failed to deal with many of the more invidious cultural schisms within the sector and is arguably at least in part culpable for the financial crisis due to a worrying lack of foresight.
In the same way as the industry must rebuild relationships with customers, so the regulator must rebuild trust with those it oversees
On the other hand, the new conduct regulator from 2013, the Financial Conduct Authority, seems to be showing evidence of hitherto absent acuity in relation to many of these industry ailments. Thus it’s chief executive designate Martin Wheatley has signalled a long-overdue crackdown on avaricious incentives, some much-needed clarity on sales of unregulated funds and a generally less laissez-faire approach to its duties overall.
This is to be applauded. But despite positive sounds about the venerable Mr Wheatley, sentiment within our own enclave of the sector remains stubbornly negative towards the FSA/FCA overall.
Of course, for a market that feels it has been more than a little singled out by its regulator, hearing Mr Wheatley describe the FCA’s approach as “shoot first, ask later” struck an unpleasant nerve. What was possibly a well-intentioned statement of intent came across as callous and opened old wounds.
In truth, however, whatever gains Mr Wheatley is making with his well-reasoned, pugnacious pronouncements are being pared by the egregious decisions that the FSA continues to consistently make in relation to a major capstone of concern at the moment: the Financial Services Compensation Scheme.
Advisers, who feel aggrieved at the size of the levies they are being forced to pay to rectify the misdemeanors of businesses that at best stretch the definition of ‘intermediation’, already had to swallow one particularly bitter pill in the summer when the regulator rejected their concerns in its review of funding for the scheme.
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